4 ms·

Anytime there is a strict cutoff rather than a gradual roll-off there will be people who are artificially disadvantaged. That tends to create a substantial inc

Anytime there is a strict cutoff rather than a gradual roll-off there will be people who are artificially disadvantaged. That tends to create a substantial income cliff which people have to climb in order to actually benefit from their increased income. If you're a salaried employee it might matter little, but if you're self-employed or a small business owner it's a billboard saying "don't work too much harder unless you're willing to work MUCH harder" to overcome the income cliff. I don't have even a clue as to how many small business owners this will affect, but it seems likely that it will be more than a few hundred thousand. I'd guess millions. It's really unfortunate.

robrenaud 13y ago
Can employers/employees work around this stupid cliffing kind regulation with optional deferred compensation? Let's say the cliff is 50k. You earn 55k/year. So you get paid 50k and opt to keep 5k in a deferred compensation stash that gets paid out sometime in the future (maybe when your baseline is sufficiently higher than 50k that's worth it?).
- twoodfin 13y ago
  Yes, it's apparently possible: http://www.irs.gov/Businesses/Corporations/Nonqualified-Deferred-Compensation-Audit-Techniques-Guide-(02-2005) http://www.irs.gov/Businesses/Corporations/Nonqualified-Defe... Interestingly enough, the employer is required to withhold FICA taxes as soon as the deferral is made, if it's truly guaranteed future income.
jdlshore 13y ago
I'm a small business owner. Small business owners were screwed by the previous health care regime. Individual plans are hella expensive. Small group plans are also expensive, and extremely sensitive to the health issues of who you had on staff. Both were going up by double-digit percentages every year. My income is over the subsidy limit, but with careful shopping, I've found a plan (with the same carrier as before) that's substantially cheaper and has better coverage. Of course, when my carrier cancelled my plan, they "recommended" a much more expensive one. If I hadn't shopped around, I would have thought that the ACA was causing my premiums to skyrocket, but the opposite is actually true. Bottom line: don't believe everything you read about the costs of ACA.

robrenaud 13y ago

Can employers/employees work around this stupid cliffing kind regulation with optional deferred compensation? Let's say the cliff is 50k. You earn 55k/year. So you get paid 50k and opt to keep 5k in a deferred compensation stash that gets paid out sometime in the future (maybe when your baseline is sufficiently higher than 50k that's worth it?).

twoodfin 13y ago
Yes, it's apparently possible: http://www.irs.gov/Businesses/Corporations/Nonqualified-Deferred-Compensation-Audit-Techniques-Guide-(02-2005) http://www.irs.gov/Businesses/Corporations/Nonqualified-Defe... Interestingly enough, the employer is required to withhold FICA taxes as soon as the deferral is made, if it's truly guaranteed future income.

jdlshore 13y ago

I'm a small business owner. Small business owners were screwed by the previous health care regime. Individual plans are hella expensive. Small group plans are also expensive, and extremely sensitive to the health issues of who you had on staff. Both were going up by double-digit percentages every year. My income is over the subsidy limit, but with careful shopping, I've found a plan (with the same carrier as before) that's substantially cheaper and has better coverage. Of course, when my carrier cancelled my plan, they "recommended" a much more expensive one. If I hadn't shopped around, I would have thought that the ACA was causing my premiums to skyrocket, but the opposite is actually true. Bottom line: don't believe everything you read about the costs of ACA.